Luweero Samuel and Another v Housing Finance Bank Ltd and Another (Miscellaneous Application No. 681 of 2022) [2023] UGCA 42 (8 February 2023)

Full Case Text

#### 5 THE REPUBLIC OF UGANDA

#### IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## MISCELLANEOUS APPLCATION NO.681 OF 2022

(Arising from Miscellaneous Application No.68O of 2022)

(Arising from Ciuil Appeal No.359 of 2022)

(Aising from Ciuil Suit No.697 of 2OO7)

## 1. SAMUEL LTIWEERO

2, LYDIA LI,IWEERO:::::::::::::::]:::::::::::::::::::::::::::::::::::APPLICANTS

#### VERSUS

## 1. HOUSING FINANCE BANK LTD

2. SSEBUDDE ALBERT:::::::::::::::::::::::::::::::::::::::::::::::RESPONDENTS 15

## CORAM: HON. MR. JUSTICE CHEBORION BARISHAKI, JA

#### (srNGLE JUSTTCE)

#### RULING

The applicants brought this application by Notice of Motion undcr thc provisions of Rule 2(21, 6(21 (b) of the Judicaturc (Court of Appeal Rules) seeking for orders that an interim order of stay doth issue staying execution of the judgment and decrec of Court in Civil Suit No.697 of 2OO7 until thc determination of the substantive application and costs of thc application bc provided for. 20

#### Background

The background to the application as can be discerncd from the pieadings is that the applicants jointly and severally cntered into an agreemcnt to borrow UGX 14O,O00,OOO/: from the lst respondent company to enable them purchase property comprised in leaschold Register Volur::e 3067 Folio 17 Plot

17 Mpanga close Bugolobi from a one Peter Mugenyi. By a mortgage deed dated 116 day of April, 2003, between the applicants and the 1st respondent, the applicants were given UGX 140,O0O,0O0/= with interest at l4oh pcr annum. 10

Under the mortgage deed dated 11/4/2OO3, the appiicants were to deposit an

agreed monthly instalmcnt of UGX 1,864,438 till paymcnt in full within an agreed period of 15 years. The applicants defaulted and the suit property was advertised for sale in the New Vision Ncwspaper of 5ft December, 2O05 by Bemuga Strict Auctioneers and Court Bailiffs who were the lst respondent's agents. The second respondent tendered a successful bid which resulted in the execution of the sale agreement betwecn the 1st and 2"d respondcnts for 15 20

the suit property at a consideration of 27O,OO0,O00/= and the 2"d respondent became the proprietor under Instrument No.364715 dated 24 l3l2006.

averred that the applicants breached the mortgage dced by persistently defaulting on the agreed monthly installment payment. Further that the lst respondent issued various reminders and a statutory notice accordingly and that the sale to the 2.d respondent was in compliance with the terms of the mortgage. The 2"a applicant in his defence alleged that he lawfully purchased

The 1st respondent filcd a dcfence denying thc applicants claim and instead

5 the suit property from the l"t respondent and averred that he was a bonafide purchaser for value having bought the suit property and raised a counter claim for loss of usage and mesne profits of the suit property.

## Grounds of the application

The grounds in support of the application are contained in the Notice of Motion and the affidavit in support deponed by Namanya Joan, an advocate of the High Court practicing with M/ S Bashasha & Co. Advocates. The grounds as far as they are relevant are that on 16ft December, 2015, leave was granted by this Honourable Court to extend time within which to lodge a notice of appeal and the notice of appeal together with a letter requesting for 10

a certified record of proceedings was fiied. That a copy of a typed record of proceedings has not been availed to the appiicants to date but the applicants have subsequently filed a memorandum of appeal and record of appeal with the available documcnts. 15

The applicants further contended that the respondents had commenced the execution proceedings and a notice to show cause why execution should not issue had been served on the applicant's advocates. There is an eminent threat of execution by way of eviction. 20

# Grounds in opposition

The application was opposed by the second respondent, Ssebudde Albert through an affidavit in reply briefly stating that on 14ft November, 2O13, the 2.d respondent obtained judgment against the applicants vide HCCS No.679 of 2006 and filed HCT EMA No.476 of 2O2l seeking for execution of decree in 25

5 HCCS No.679 of 2006. That the applicants filed High Court Civil Appeal No.359 of 2022 challenging the judgment and further applications for interim and temporary stay of execution of the decrce in HCCS No.679 of 2006. Further that the applicants' affidavit in support of the application is incurably defective in so far as it is deposed by an advocate who is also the advocate representing the applicants in the instant application and ought to be struck out. 10

The 2.a respondent contended that the respondents as successftrl parties obtained a decree directing the applicants to vacate the suit property and if this application is to be granted as requcsted by the applicants, then the applicants should deposit security of 1,O0O,000,000 (One Billion Shillings) as a condition for stay for the due performance of the decree. Further that the applicants intended appeal has not been served on them and is without merits. The applicants' advocates have for over 14 years sat on the proceedings and maintained occupancy of the respondents' property without any account to the respondent.

### Repreeentation

At the hearing of the appiication, the applicants were represented by Mr. Abraham Mpumwire. The 1"t respondent was unrepresented while Ms. Aida Musoke appeared for the 2nd respondent. The applicants and the lst respondent were not in Court.

## 5 Appllcants' submissions

Counsel for the applicants submitted that the instant application had been brought under Rules 2(21 and 6(2) (b) of the Rules of this Court which empower this Court to hear this application and grant an interim stay of execution of the judgment and dccree of the High Court in Civil Suit No.697 of 2OO7 pcnding hearing and dctcrmination of Miscellaneous Application No.68O oI 2022 and Civil Appeal No.359 of 2022 pending before this Court. He added that the applicants had satisfied all the conditions neccssary for the grant of an interim order of stay to wit; the applicants had filed a Notice of Appeal. Counsel submitted that upon discovering that judgmcnt had been entered against the applicants, they sought for and were granted leave to extend timc within which to file a Notice of Appcal and thc samc was filcd on 8ft January, 2016 togethcr with a letter requesting for a typcd copy of the proceedings. He relied oo Zubeda lllohammed and Anor V Lalla Wallla and Anor, Cfutll ReJerence No. O7 oJ 2076.

- Secondly that there was a substantive application for stay of exccution vide Miscellaneous Application No.680 of 2022 filcd in this Court. Lastly, that there is a serious/imminent threat of execution and as such a high likclihood that the substantive application and the appeal pending before this Court will be rendered nugatory if thc order ofinterim stay is not granted. Counsel added 20 - that the respondents had already served upon thc applicants' counsel a noticc to show cause why execution should not issue dated 28fi J:une,2022 and that the matter was coming up for execution in thc High Court Commercial Division on 30e Septembcr, 2022 hence posing an eminent threat. 25

5 He contended that the respondents werc in the process of having a warrant of eviction against the applicants renewed which had iapsed so as to complete the process of execution by way of eviction. He added that in as far as the execution process had already commenced as evidenced by the service of the notice to show cause why execution should not issue on the applicants' advocates, if this application is not granted, the applicants shall have no legal protection hence leading to their eviction from the suit land and evicting the appiicants from the suit land will subjcct them to gross ridicule and having no alternative placc abode. Hc relicd on Gc,shumba Manlraguha V Sanm Nkudige, Clull Appltcatlon No.24 of 2015 for the proposition that it was the duty of Court to which an application for stay of execution is pending to see that the appeal if successful is not rendered nugatory. He prayed that the application be allowed. 10 15

# l.t Respondenttg submissions

Counsel submitted that they had not been served with any of the pleadings of the applicants in respect of thc instant application and added that sincc counsel for the 2"d respondent had becn served, the 1st respondent would associate itself with the submissions of counsel for the 2nd respondent and prayed that the application be dismissed with costs. 20

### 2ad Respondents' submissions

Counsel for the 2nd respondent raised 2 preliminary objections to the effect that the instant application was rcs judicata and offended section 7 of the Civil Procedurc Act. She submitted that the issue of stay of execution was settled by the High Court in Miscellaneous Applications No.549 ol 2Ol4 and 6lPage 25

5 583 of2021 between the applicants and the respondents. She added that the parties entered a consent ordcr on 11th April, 2014 upon which the applicants obtained an order for stay of execution and possession of the suit property until the determination of the appeal, whereas in MA No.583 of 2O2 1, Court set aside the consent order on grounds that it had been abused by the applicants since they had not filed an appeal since 2014. 10

Counsel further submitted that the praycrs sought by the applicants in the instant application were the same prayers made in MA No.549 of 2074 and 583 of 202 1. In counsel's view, the applicants ought to have appealed against the ruling of Stephen Mubiru, J dated 1st November, 202 1 setting aside the consent order instead of {iling the instant application for interim stay of execution and stay of execution since the same had already been dealt with in the lower Court.

The second preliminary objection was to the effect that the affidavit in support of the application deponed by Namanya Joan an advocate of the High Court was incompetent as it contravened Regulation 9 of thc Advocates (Professional Conduct) Regulations which imports the legal position that counsel cannot be a witness in the same case his representing. She added that in paragraphs 1 and 2 of the affidavit in support of the application, the deponent Namanya Joan stated that she was an advocate of the High Court and obtained instructions to represent the applicants after judgment had passed against them in the High Court. In counsel's view, this meant that as far as this application is concerned she had instructions as an advocate to represent the 20 25

5 applicants in the main appeal and in the instant application hence putting Namanya Joan in a position of being counsel as well as an advocate.

Counsel furthe r submitted that the Suprcme Court in Hon. Theodore Sselclkubo and Ors V The Attorneg General and Ors, Constlhttlonal Appllcdtlon No. OS oJ 2074 listed the conditions to be fulhlled before an application such as this can be granted to include; the applicant must show that hc lodged a notice of appcal, that substantial loss may result to thc applicant unless the stay of exccution is granted, that the application has been made without unreasonable delay and that the applicant has given security for due performance of the decree or order as may ultimately be binding upon him.

Counsel submitted that there is an imminent threat of execution but did not expound or demonstrate on thc nature of thc threat and or loss that shall occasion the applicants oncc thc 2"d respondcnt procceds with the execution. In counsel's view, there will be no substantial loss on the part of the applicants if the present application is not allowed. She added that security must be given for the due performance of the decrce and the requirement for payment of security for costs is to ensure that a losing party does not intentionally delay execution while hiding under unneccssary applications. Counsel prayed that the applicants furnish security for costs of 1,OO0,OO0,OOO/= as a condition for grant of interim stay of cxecution.

# Submissions in rejoinder

Counsel for the applicants submitted that for thc doctrine of res judicata to apply, the plaintiff or applicant must have sought to have the same issues 8lPage

- 5 and subject matter as between the same parties adjudicatcd upon by the same Court which had earlier on passed a judgmcnt ovcr thc same. Counsel added that in the instant application, the applicants are not seeking a stay of execution in the Commercial Court which had sct asidc a consent order for stay of execution vide Misc. Application No.583 of 2021 but have made the application in the Court of Appeal which is competent and has jurisdiction to hear the instant application. He relied on Aids Health Foundatlon V Dr. Stephen Mlrembe Kizlto, Cfinl Appltcatlon No.747 of 2074 for the proposition that the High Court has jurisdiction to hear applications of such a naturc before the same can be filed in this Court. 10 - Counsel contended that the issues in the instant application are substantially different from those in Miscellaneous Applications No.549 of 2Ol4 and 583 of 2027. He added that in the instant application, the applicants are seeking to stay execution on grounds that there is an imminent threat of execution in as far as the respondents had served upon the applicants a noticc to show cause why execution should not issue dated 28e . June,2022.ln his view, the facts and issucs in the instant application arc materially diffcrcnt from those earlier adjudicated upon in Misccllancous Applications No.549 of 2Ol4 and 583 of 2O2l and prayed that the preliminary objection be dismissed. 15 20

Regarding the second preliminary objection, counsel submitted that the affidavit sworn by Namanya Joan did not contain any contentious mattcrs but was merely premised on facts of how the suit had transpired up to the current stage. She added that a perusal of the affidavit in reply filcd by the 2"d respondent and thc submissions thercto clearly revcal that there is no 25

9lPage. - 5 particular ground in the afhdavit in support of this application that the respondents were disputing. In counsel's view, the affidavit did not offend the provisions of regulation 9 in as far as there was nothing therein to cross examine and the deponent would never run the risk of being called as a witness in the instant case. He relied on lfibarara Municlpal Councll V - Jetha Brothers Ltd, Mlscellaneous Appllcatlon No.7O of 2021 for the proposition that affidavits can bc sworn by anyonc to provc a sct of lacts and an advocate is not an exception. 10

Counsel further contended that it was not in dispute that there was a competent notice of appeal on record as well as a substantive application for stay of execution vide Miscellaneous Application No.680 ol 2022. That the applicants have lodged a Memorandum of Appeal which shall be rendered nugatory. He added that there was an imminent threat of execution in as far as the respondents have commenced execution proccedings evidenced by the Notice to Show Cause Why Execution should not issue.

Counsel submitted that the applicants were able and willing to abide by the terms of set by Court if the application is granted but the prayer of 1,000,000,000/= made by the respondents was outlandish and devoid of any basis. He prayed that this Court disregards the preliminary objections and grant this application. 20

#### Court's analysis 25

Ru les 6 (2), 42 (2) and 43 of the rules of this court give wide discretion to this Court to grant interim or substantive orders of stay of execution for purposes of preserving the right of appeal, but this should be where special l0 lPage

## 5 circumstances exist. See:. La.urence Muslltua Kgdzze V Eunlce, Supreme Court Clull Appeal No. O78 of 1990.

When the matter camc up for hearing on 27b September, 2022, the applicant made an oral application under Rule 2(2) of thc Rules of this Court seeking that a protective order be issued to maintain the status quo of this matter until the Court issues its ruling in this application. Counsel referred to

paragraph 11 of the affidavit in support of the application to support his oral application. 10

Counsel for the 2"d respondent had no objection to the issuance of thc protective order. Paragraph 5 of the application states that the respondents

- were in the process of executing the decree of Court in Civil Suit No.697 of 2OO7 and had served the applicants' lawyers with a Notice To Show Cause Why Execution Should Not Issue. Thc deponcnt attached a copy of the said notice under paragraph I I of the affidavit in support of the application and it is clear that there is an imminent threat of execution which if carried out will 15 - render this application nugatory. 20

Rule 2(2) of the Rules of this Court gives this Court discretion to mal<e such orders as maybe necessary to attain the ends of justice. Since the 2nd respondent had no objection to the issuance of the protective order, I granted the order preserving the status quo in Civil Suit No.697 of 2oo7 until thc determination of this application.

I have carefully studied the submissions of both counsel and considered thc evidence on record.

ulPage

5 Before I delve into the merits of this application, counsel for the 2nd respondent raised 2 preliminary objections; first that that the instant application was resjudicata and offended section 7 ofthe Civil Procedure Act. She submitted that the issue of stay of execution was settled by the High Court in Miscellaneous Applications No.549 of 2Ol4 and 583 of 2021 between the applicants and the respondents. In reply, counsel for the applicants submitted that in the instant application, the appiicants are not seeking a stay of execution in the Commercial Court which had set aside a consent order for stay of execution vide Misc. Application No.583 ol 2027 but have made the application in the Court of Appeal which is competent and has jurisdiction to hear the instant application. 10 15

#### Sectlon 7 of the Cludl Procedure Act provides that;

"No Court shall try any suit or rcsze in uthich the matter directlg and substontially in issze has been directlg and substantially in issue in a former suit bettueen the same parties or bettueen parties under whom theg or ang of them claim litigation under the same title, in a Court competent to try tlrc subsequent suit or the suit in which tle issue has been subsequently raised and had been heard and finallg decided bg Court."

From the evidence on record, the applicants sought a stay of execution in the Commercial Court vide Misce llaneous Application No.549 of 2014. ln Miscellaneous Application No.549 of 2014, the parties entered a consent order on 1lft April, 2014, upon which the applicants obtained an order for stay of execution and possession of the suit propcrty until the determination of the 25

12 lPage

5 appeal. Having failed to file an Appcal years later, the High Court set aside the consent order for failure to file an appeal within time vide Miscellaneous Application No.583 of 2021. The applicants then filed the instant application in this Court vide Miscellaneous Application No.681 ol 2022.

### Rule 42 oJ the Court oJ Appeal Rules provide;

- 10 "42. Order of hearing applications - 1) Wheneuer an application may be made eith.er in the Court or in the High Court it shall be made first in the High Court. - 2) Nottuitlstanding sub rule (1) of this rule, in ciuil or ciminal matter, the Court maA, on application or of its oun motion, giue leaue to appeal and grant a conseEtential extension of time for doing anA as tle justice of the case requires, or entertain an application under rule 6(2) (b) of these Rules, in order to safeguard the ight of appea| notwitlstanding the fact thot no application for that purpose has first been made to the High Court."

# 20 Kakuru, JA in Aids Health Poundatlon V Dr. Stephen Mirembe Kizito, Clvil Appltcation No,747 of 2O14 statcd as follows;

"Thi.s Court has before determined such applications and uill continue to do so. Hotueuer, the High Court too has concurrent jurisdiction ouer such matters. TLe High Court has jurisdiction to hear and detennine an application for stag of exeantion pending appeal to this Court, an injunction and a stag of proceedings."

5 I therefore do not agree with counsel for the 2"d respondent's submission that the said application was res judicata for having becn filed in thc High Court (Commercial Division) first vide Misccllaneous Application No. 549 of 2074 which was set aside and then {ilcd the instant application.

The second preliminary objection raised by counsel for the 2,d respondent was that the aflidavit in support of the application deponed by Namanya Joan an advocate of the High Court was incompetent as it contravened Regulation 9 of the Advocates (Professional Conduct) Regulations which imports the legal position that counsel cannot be a witne ss in the samc case his representing. In reply, counsel for the applicants submitted that the afhdavit sworn by Namanya Joan did not contain any contentious matters but was merely 10

premised on facts of how the suit had transpired up to thc current stage. 15

I have looked at the said affidavit of Namanya Joan attached to the application and dated 15s September,2022. The said affidavit indeed does not contain any contentious matters that would require the dcponent to appcar as a witness. The deponent mercly narratcs thc evcnts of thc suit and why the instant application should be granted.

Muhanguzi, . JSC in Mba.rara Municlpal Council V Jetha Brothers Ltd, Miscellaneous Application No.7O of 2021 statcd that;

"In my uiew, affidauits can be sutont by anAone to proue a set of facts and an aduocate is not an exception. An aduocate is therefore not prohibited to swear an affidauit uhere necessary especiallg on matters that are well tuithin his/ her knouledge. In mA uieu, the aboue 5 paragraphs do not contain any contentious matter ond I therefore dismiss this objection too."

The 2"d respondcnt's preliminary objections are overruled and I will proceed to re solve the matter on its merits.

Rule 2 (2) of the rules of this Court providcs the Court with inhcrcnt powcrs 10 to make such orders as maybe necessary for attaining the ends of justicc

ln Zubeda Mohamed. & Sadru Mohamed V Latla Kaka Wallla & Anor, Supretne Court Civil Reference No. O7 of 2076 which citcd with approval Huan Sung Industries Ltd us. Tajd.in llusslen and 2 others SCMA No. 79 of 2OO8, thc Supremc Court statcd as follows;

"Considerations for the grant of an inteim order of stay of execution or inteim injunction ore whether there is a substantiue application pending and whether there is a serious threat of execution before heaing of the substantiue application. Needless to saA, there must be a Notice of Appeal. See Hutan Sung Industrles Ltd as. TaJdln Husslen and 2 others SCI}IA .l\Io. 19 of 2OO8. 20 15

> In summary, there are three conditions that an applicant must satisfy to justifu the grant of an inteim order:

- 1. A competent Notice of Appeal; - 2. A substantiue application; and - 3. A seious threat of exeantion."

15 lPage

5 The record shows that the applicants l-rled a Notice of Appeal on 8s January, 2016 marked as annexture "B". The applicants have not only filed a Notice of Appeal but also a letter requesting for a typed Record of Proceedings and a Memorandum of Appeal marked as annexture "C" and "G". A substantive application referenced as Miscellaneous Application No.68O of 2022 has also been hled. 10

On whether there is a serious threat of execution, the applicants averred under paragraph 11 of the affidavit in support of the application that the respondents had commenced the execution proceedings and had served the applicants' lawyers with a copy of a Notice to Show Cause Why Execution Should Not Issue marked as annexture "H'.

I therefore find that the applicants are facing an eminent threat of execution of the decree.

I am therefore satisfied that the applicants have satisfied the conditions required for grant of an interim order of stay. I allow the application and make the following orders: -

1. An interim order is hereby issued staying the execution of the Judgment and Decree of Court in Civil Suit No.697 ol 2OO7 pending disposal of Miscellaneous Application No.680 of 2022 which is pending before this Court.

2. The Registrar of this Court is hereby directed to fix for hearing Miscellaneous Application No.680 of 2022 in the next convenient session of Court. 25

5 3. Thc costs of this application shall abidc the outcome of thc substantive application for stay of cxccution

I so ordcr

Dated at Kampala this s day of 2023.

10 C orion Barishaki

JUSTICE OF APPEAL